What is private mortgage insurance and when can you remove it?

Private mortgage insurance (PMI) is a policy that protects the lender if you default on your loan. It's typically required when you put down less than 20% on a conventional mortgage. PMI usually costs between 0.5% and 1.5% of the loan amount annually, added to your monthly payment. You can request removal once your loan balance reaches 80% of the home's original value, either through payments or appreciation. Under the Homeowners Protection Act, lenders must automatically cancel PMI when your balance reaches 78% of the original purchase price, assuming you're current on payments. You can also potentially remove it sooner by getting a new appraisal if your home's value has increased significantly.